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Michael Steele: The real issues facing communities like Baltimore

Michael Steele: The real issues facing communities like Baltimore
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Before President TrumpDonald TrumpBiden to sign executive order aimed at increasing voting access Albany Times Union editorial board calls for Cuomo's resignation Advocates warn restrictive voting bills could end Georgia's record turnout MORE went on a reprehensible rant about the city of Baltimore being “rodent infested,” Rev. Al Sharpton and I were prepared to head to the city of Baltimore to discuss real issues facing minority communities around the country. The event, “Reversing the Economic Erosion of Home Ownership in Black Communities,” had been planned months in advance but was hijacked by the social media escapades of the president. We were traveling to the city to find ways to work with the community instead of disparaging it. 

Baltimore has a storied history of being strong, resilient, vocal and vibrant. 

However, it also has a more recent history of issues related to joblessness, income inequality, homelessness and block after block of vacant housing. It was with both the good and the bad in mind that we went to the city to learn what the community had to say about its failures and successes, as well as the ways in which policymakers can make a difference.  

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In the rush to lay blame for what ails Baltimore (as if that justifies its critics or excuses the city’s failed leadership), we cannot overlook the institutional biases and discriminatory housing policies that date back over a century and the continuing impact they have on the city to this day. As the history of housing in Baltimore will tell us, “[m]ost respectable bankers, builders, and brokers acquiesced in the creation of a dual real estate market,” whereby segregation laws devalued the properties owned by blacks.

During my time as lieutenant governor of Maryland, I saw firsthand what can happen when large financial institutions are not held accountable. Homeownership loans were very profitable for banks leading up to the 2008 crash and these adjustable rate mortgages were considered to be secure and well within the means of those who were buying new homes for the first time. It was not until rates began to rise and people began realizing what was in the fine print that a string of defaults began triggering a massive loss of homeownership that rippled throughout the minority community, in Baltimore and across the country. 

By the end of 2009, nearly 3 million American families nationwide were foreclosed and nearly 1 million Americans were evicted from their homes and out on the street. The insatiable drive to boost profits continued the cycle of assuring borrowers in the low-income community that they had the income to support these loans that they had no real way of paying back. As I previously wrote about in February of this year, it was in the pursuit of financial gain that banks like Countrywide Financial took actions that decimated entire communities with their lending practices. 

The impact of the devious actions leading up to the 2008 crisis remain today. We must work collectively to fix these past injustices, but it starts with acknowledgement that there is a problem and how the problem impacts communities like Baltimore.

In addition to housing financing policies, we also wanted to discuss an issue that is equally troubling for Baltimore and urban communities like it: the allegations that some of our largest banks have begun the practice of fixing interest rates on Variable Rate Demand Obligation (VRDO) bonds in cities with significant black populations, like Philadelphia and Baltimore. As a former bond attorney, I can tell you we should be concerned. 

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According to reports, a few banks “coordinated” to artificially inflate interest rates for these VRDO bonds which are used to fund various municipal services projects like infrastructure, schools and water treatment projects. Some estimate that this predatory practice has cost Chicago more than $10 million and Baltimore nearly $2 million. Those hard-earned tax dollars were stripped from these cities in a greedy pursuit of outsized profits — an unfortunate trend that minority communities have seen far too many times.

This potential housing and financial bubble is why Rev. Sharpton and I initially started conversations with Bank of America, and invited it to work with us to effect real change in our communities. To its credit, Bank of America has indicated that it is ready to do that. But more partners are needed — and as I said on the steps of New Shiloh Baptist Church: Mr. President, I ask that you come to Baltimore, walk its streets and talk to its citizens, and understand why people still want to live there. And then help.

But, if there is any good that can come from all the tweets and ugliness of this week, it is that the national spotlight has been fixed on a real issue that communities like Baltimore have been struggling to deal with since the 2008 financial crisis. And it is well past time to put the rhetoric aside and get to work to do something about it.

Michael Steele is the former Republican National Committee chairman and former lieutenant governor of Maryland. He is also an MSNBC political analyst.